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High Reward to Risk Trading

  • Post #1
  • Quote
  • First Post: May 6, 2016 3:13pm May 6, 2016 3:13pm
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Welcome everybody This thread is about high reward-to-risk trading.
I am convinced that this is one of the best ways to become consistently profitable in trading.

We are going to :

  1. trade london session
  2. trade majors and gold.
  3. pick tops and bottoms
  4. sell highs and buy lows
  5. trade volatility
  6. fade news that goes against the trend
  7. use relatively small stops with reward to risk ratios ranging from 2:1 to 20:1.

As our stops get smaller our targets should get bigger because we will be stopped more often.
One winner should cover all previous losses plus additional profit.

We will use:

  1. S/R levels
  2. Volatility indicators
  3. Unconventional indicators


Have a nice weekend ...

Khalil Abokwaik

No guts, no glory
Sounds good to me.... subscribed. What kind of unconventional indicators do you have in mind?
Better to run, than curse the road
High reward to risk ratio isnīt better or worse than low reward to risk ratio, it just depends on the strategy. My most succesful strategy uses a 1:1 and still makes a decent profit. Anyway this sounds interesting.... subscribed
Old ways dont open new doors
I like the look of this Mistress Khalil
  • Post #5
  • Quote
  • Edited at 7:43am May 7, 2016 4:17am | Edited at 7:43am
Quoting gwindy
I like the look of this Mistress Khalil
Ooh, She is so wiiiiild

Still, wife is in control.
So I might be able to play with the mistress only when wife is in the kitchen or shopping

..........

PS: Wife = Work, Mistress=Forex.
No guts, no glory
Who knows me knows that I trade everything. Scalping, Breakouts, Grids, Divergence, Candle Patterns, MTF, Trend Following .... etc.

This one will be focused on selling relatively highs and buying relatively lows.

We will be looking for perfect trades, we might make few mistakes to get there. But we will not let our mistakes kill us.

We love high impact news, because there lies the meat of the day.

I will be posting live trades.
Others are also welcome to post theirs.

I was confused where to start this thread: Trading Discussions, Journals, Systems.
Then I started it in Interactive Trading. It is my first thread under interactive trading.

I will leave it to FF fellows to move it somewhere else if they feel so.
No guts, no glory
Quoting TornadoTradr
High reward to risk ratio isnt better or worse than low reward to risk ratio, it just depends on the strategy. My most succesful strategy uses a 1:1 and still makes a decent profit. Anyway this sounds interesting.... subscribed
Believe me, It is.

We are not smarter than the market.
High win ratio systems don't last long.
By high win ratio I mean anything above 50%.
No guts, no glory
Quoting abokwaik
{image} Welcome everybody This thread is about high reward-to-risk trading. I am convinced that this is one of the best ways to become consistently profitable in trading. We are going to : trade london session trade majors and gold. pick tops and bottoms sell highs and buy lows trade volatility fade news that goes against the trend use relatively small stops with reward to risk ratios ranging from 2:1 to 20:1. As our stops get smaller our targets should get bigger because we will be stopped more often. One winner should cover all previous...
how can we do ?master?
  • Post #9
  • Quote
  • Edited at 5:05am May 7, 2016 4:48am | Edited at 5:05am
Few charts ...

Attached Image (click to enlarge)
Click to Enlarge Name: EURUSDM5_1.png Size: 82 KB


Attached Image (click to enlarge)
Click to Enlarge Name: GOLDM5_1.png Size: 86 KB
No guts, no glory
Sounds nice, definitely subscribed.
"Men Who Can Both Be Right & Sit Tight Are Uncommon" ~ Jesse Livermore
We will trade only majors and gold in London Session only.
We will close all trades before end of day, the sooner the better. There is always tomorrow.
Our return targets will be : 1 to 4% a day. 7 to 15% a week. 25 to 60% a month.
Our drawdown should not exceed 10%.
Our consecutive daily losses should not exceed 20 on all traded pairs.

In order not to leave so much money on the table, we will take partial profits.
But we will not move our stops unless there is red news coming.

As you probably know, I love to automate trading.
But I will trade this manually for a while (3 to 6 months) before going into automation.

Meanwhile we will get assisted by few indicators.

We will use tools that can help us identifying confluence areas (high probability reverse areas=HPRA).
These can include but not limited to : Pivots, Fibs, Higher Time Frames Open/High/Low, BRNs, Trend Channels .... etc.

In addition to the above,

I will use a modified version of my Need4Speed volatility indicator for entry confirmation.
And the LVC Detector I developed based hukam's Low Volume concept, for potential targets.

I will post both indicators before market open.
No guts, no glory
Our equity graph will look something like this ...
This guy made 250% in a year, with DD < 10%. (live acc).

Attached Image (click to enlarge)
Click to Enlarge Name: sample_equity_graph.PNG Size: 97 KB
No guts, no glory
This is how n4s (need4speed) confirms our trade.

Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSDH1_n4s.PNG Size: 51 KB


I will be using a live Pepperstone Razor account in this exercise for their low cost.
I will re-set the trade explorer start date to start of next week, in order to hide previous trading activity and start fresh.

For anyone following live, I advise a low transaction cost broker, as this is an intra-day trading that involves relatively high number of transactions specially when trading multiple pairs.

Be aware, that this type of trading requires nerves of steel.
We are going to endure consecutive losses until we get our runner.
Then we have to be extremely patient on profit taking.

Example of using LVCs as profit targets.

Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSDM5__LVC.PNG Size: 62 KB
No guts, no glory
You shared some great info.I need to grasp it more.I delayed (future bars) the signal to 1 bar .LVC would be a good candidate as an early, back up signal for trend following system.I am just wondering , delaying the bars in LVC indicator would be any problem with neural network pattern recognation.
Attached Image (click to enlarge)
Click to Enlarge Name: system.png Size: 26 KB
Quoting olsen-yersen
You shared some great info.I need to grasp it more.I delayed (future bars) the signal to 1 bar .LVC would be a good candidate as an early, back up signal for trend following system.I am just wondering , delaying the bars in LVC indicator would be any problem with neural network pattern recognation. {image}
LVCs may be used as trend signals but they are un-reliable, specially when used with low number of future bars.
Look at how many false trend signals you have in the posted chart.

A better implementation would be to use a closed LVC as a trigger, as these areas may act as S/R zones.
You can better understand this if we study the Extreme LVC which is the GAP (zero volume on tiny time frame).
In most of the cases Price tends to close those gaps, and bounce.

See your chart with my comments :

Attached Image (click to enlarge)
Click to Enlarge Name: system_01.png Size: 41 KB
No guts, no glory
This is LVC indicator we will be using.

Attached File
File Type: ex4 LVC_Detector_04.ex4   15 KB | 612 downloads


As for N4S, I will need to convert N4S EA to an indicator before sharing here.
No guts, no glory
Quoting abokwaik
This is LVC indicator we will be using. {file} As for N4S, I will need to convert N4S EA to an indicator before sharing here.
could you explain how the LVC works to understand what the indy is doing?
(.)(.) think first ...
Quoting maximumguita
{quote} could you explain how the LVC works to understand what the indy is doing?
All details are available in the Low Volume Candles thread.
No guts, no glory
Quoting abokwaik
{quote} All details are available in the Low Volume Candles thread.
Thank you
(.)(.) think first ...
Quoting abokwaik
Our equity graph will look something like this ... This guy made 250% in a year, with DD < 10%. (live acc). {image}
which guy?
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